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- MMA's: SPECIAL REPORTS / IN THE PRESS
- MMA"s Response To Moody’s Proposal For Global Scale Ratings For All Issuers
(SPECIAL: pub. Apil 14, 2008;)
Municipal Market Advisors generally supports Moody’s proposal to provide Global Scale Ratings (GSRs) for all municipal issuers, regardless of tax status. However, we believe the following improvements are essential to more permanently resolve the problems the municipal scale has created for issuers, investors, and regulators. These improvements are:...
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Supreme Court Muni-Bond Delay Has Lawyers, Markets Puzzling
(SPECIAL: pub. April 9, 2008;)
(Bloomberg) -- ''The length of time to me means that there could be more subtlety to the decision, or that the decision itself might not be as cut-and-dried as we had expected,'' said Matt Fabian, managing director at Municipal Market Advisors, a Concord, Massachusetts-based research firm....
[ click to Bloomberg.com ]
- Munis: The new power portfolio
(SPECIAL: pub. February 12, 2008;)
(Money Magazine) -- If there's a lesson to be learned from the stock market's recent slide - triggered by massive losses on exotic and risky mortgage-backed securities - it's that there's nothing wrong with simple, boring investments. Like girders supporting a bridge, plain-vanilla bonds can help buttress a portfolio in a shaky market such as this.
But in January, high-quality five-year munis - those rated triple A by agencies like Standard & Poor's or Moody's - were paying out 2.80% on average, according to Municipal Market |ADVISORS. That was notably higher than the 2.53% yields of five-year Treasuries. Yes, rates are still modest in absolute terms. But "it's been very rare that you can buy a true triple-A-rated muni bond at 100% of Treasuries," says George Strickland, managing director of Thornburg Investment Management.
[ click to Money.com ]
- Next phase of credit crunch, the monoline meltdown
(SPECIAL: pub. February 8, 2008;)
MARK COLVIN: The global credit crunch is entering a dangerous new phase. In the United States, big bond insurers are facing huge losses. They're the companies that insured the debt of defaulting subprime mortgages. Many of them are now facing ratings downgrades and potential collapse. That's a major worry because if the bond insurers fail, it will create a vicious cycle as their investment bank customers are left holding the can. Some experts say the banks could suffer an extra $US 100-billion in losses and write-downs, causing a fresh round of turmoil on credit markets and stockmarkets.
[ click to ABC.NET.AU ]
- Do Bond Insurers Need CPR? Fears of a muni market meltdown may be overblown
(SPECIAL: pub. February 8, 2008;)
"By and large, the decision is made by the investor." Adds Matt Fabian, managing director of research firm Municipal Market Advisors: "It's not about credit quality. It's just a bureaucratic cost municipal issuers have to pay."
[ click to BusinessWeek.com ]
- Davis V. Kentucky - Decision
MMA is expecting a Supreme Court Decision on the Davis v. Kentucky case in the next few weeks; the likely outcome will affirm states’ ability to tax in- and out-of-state bonds differently and shore up the muni market status quo.
- Next Big Crisis Could Involve Bond Insurers
(SPECIAL: pub. January 31, 2008)
There are $2.6 trillion worth of municipal bonds outstanding in America, with New York State holding about 7.5%, or roughly $200 billion, according to research firm Municipal Market Advisors.
click to NY Sun
- In the absence of a credible bailout...
(SPECIAL: pub. January 31, 2008)
"In the absence of a credible bailout plan, I think investors and issuers need to assume that MBIA, along with all of the other companies, will face continuing, worsening downgrade pressure all year,'' Matt Fabian, a managing director at Concord, Massachusetts-based consulting firm Municipal Market Advisors, said in a telephone interview.
click to Bloomberg.com
- Downgrades aplenty
(SPECIAL: pub. January 25, 2008)
"[The insurers] have a real lot of exposure to subprime credit cards and auto loans, for example. As those asset classes don't perform as well, even if you see a fraction of the damage you have seen in sub-prime housing, it is going to cause the ratings agencies to increase the requirements again."...
click to BusinessSpectator.com
- Corporate Ratings for Municipals?
Most municipal bonds are rated on a different, more conservative rating scale than corporate bonds. Triple-A US corporate bonds have up to 10x the historical default rate of single-A munis (Fig. 1). Neither municipal issuers, nor the individual investors who own the large majority of outstanding paper or fund shares, understand this point. As a result of the “muni rating scale,” taxpayers likely pay a large premium to access the capital markets (via insurance and rating fees and higher interest rates). We recommend that state and local issuers, or their federal regulators, consider requiring rating scale equivalency either directly or by policy alternative.
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- 2008 Brings Uncertainty and Also Opportunity
There are substantial uncertainties in municipals, but market-level risks one way or the other do not appear large. Last week, yields rallied across the curve with economic and corporate data raising fears of recession, and with an apparently solid January reinvestment bid putting away a fairly thin supply of paper. This was, once again, a difficult week for hedged or arbitrage-oriented investors as tax-exempts underperformed Treasury strength, and muni relative value indicators were pressed almost uniformly cheaper.
While we continue to recommend holding back some liquidity allocation to take advantage of any negative repricing, near-term prospects for such appear limited. Thus, with credit and maturity spreads returning, there is some yield opportunity for buy-and-hold investors willing to extend out along the curve. Total return investors are better positioned 5-10yrs
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- NYT: These Bonds May Shine (Despite Your Tax Bracket)
Hedge funds with large leveraged positions in municipal bonds contributed to the situation. These hedge funds had shorted Treasuries to hedge against their muni bets, explained Thomas Doe, founder and chief executive of Municipal Market Advisors. As Treasuries began to rise, the hedge funds had to sell munis to cover their exposed shorts in Treasuries.
“Last August was the first time rates went down and muni yields rose,” Mr. Doe said. “That’s because leveraged investors had to sell their munis.”
click to NYT site
- CNBC: Matt Fabian discussing municipals with Ron Fielding from the Rochester Oppenheimer Funds.
Trouble in the debt markets also took a bite out of municipal bonds in August. Matt Fabian Municipal Market Advisors sr. analyst, and Ron Fielding, OppenheimerFunds portfolio manager, discuss the cause of the bust and where the recovery begins.
click to CNBC video
- theStreet.com - Mortgage Crisis and Muni Bond Funds
Earlier this year, before the tender-option-bond programs started backfiring, investors using this strategy accounted for about 8% of the $2.4 trillion market, according to Municipal Market Advisors, an independent research and strategy firm.
click to theStreet.com story
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